Industrials Regulatory News and Trends, December 2, 2022

Welcome to Industrials Regulatory News and Trends. In this regular bulletin, DLA Piper lawyers provide concise updates on key developments in the industrials sector to help you navigate the ever-changing business, legal and regulatory landscape.

Flying taxis may be coming soon. The Federal Aviation Administration on November 21 proposed new rules that would help pave the way for commercial air taxi operations, potentially by the middle of this decade. The proposed rulemaking is being regarded as beneficial to manufacturers of electric vertical takeoff and landing aircraft (eVTOL). The proposed rulemaking updates current air carrier definitions by adding a definition for “powered-lift aircraft operations.” Commercial operations such as airlines, charters, and air tours are already defined under FAA rules. The agency said in a statement, “This powered-lift definitions rule lays the foundation that will allow operators to use powered-lift aircraft.” In summer 2023, the FAA expects to release a separate proposed rulemaking that would set out operating requirements and certification steps for eVTOL pilots. 

Aviation manufacturers urge federal government to delay full rollout of 5G. Twenty-four aviation industry groups and prominent manufacturers have sent an open letter to all federal departments that regulate radio communications urging them to delay the planned full rollout of 5G cellular services to the public. The groups and companies say that the aviation industry should first finish codifying a comprehensive set of mitigations that help avoid potential interference with flight communications. The letter, signed by virtually all aviation groups, says the industry isn’t ready for the planned July 2023 end of restrictions on 5G transmitters – and that stakeholders and the flying public will bear the brunt of disruptions that will occur if action isn’t taken now. "Our aviation coalition strongly believes that instead of once again waiting until the eleventh hour, now is the time for the leadership at federal agencies and the White House to implement a solution that allows 5G to move forward and avoid further flight delays and cancellations,” the groups said.

Defense leaders of NATO countries define their coming Ukraine needs. A November 18 meeting in Brussels of armaments directors from the 45 nations that make up the current pro-Ukraine NATO coalition, chaired by US Under Secretary of Defense for Acquisition and Sustainment William LaPlante, is expected to lead to more military support for Ukraine in 2023 and more opportunities for US defense manufacturers. Building on a consensus from their last meeting in September, the armaments directors discussed the need to ramp up in four key areas: (1) ground-based, long-range attacks; (2) air defense systems; (3) air-to-ground capabilities; and (4) sustainment support. In each area, the US delegation and its international partners shared their progress toward mapping current global production capacity of key capabilities and component parts and identifying associated supply chain and production constraints. The discussion set the stage for member countries to collaborate on increasing production and identifying opportunities to create interoperability between systems. In addition, the directors discussed building sustainment capacity in Ukraine, including forward repair activity, access to spares, and other sustainment enablers.

Which industries will benefit most from Inflation Reduction Act funding? A Bloomberg News survey of the leading possible manufacturing uses of the $369 billion now available under the Inflation Reduction Act concludes that battery storage, solar and wind power, green hydrogen, carbon capture, and electric vehicles are the industries most likely to benefit from those funds. Roughly 27 percent of the 691 survey respondents chose battery storage as their top pick. Solar and wind companies placed second at 18 percent, followed by green hydrogen (17 percent), carbon capture (14 percent) and EV manufacture (10 percent). Because the bill was passed so recently by Congress, money is only starting to be allocated.

Government subcontractor agrees to pay more than $300,000 to settle False Claims Act allegations. On November 18, Wise Services, Inc., a subcontractor alleged to have caused the submission of false invoices to the US Department of Energy and to have paid kickbacks to employees who helped facilitate the alleged scheme, agreed to pay more than $300,000 to resolve DOJ’s False Claims Act allegations against it. According to the settlement agreement, Wise submitted hundreds of invoices to prime contractor MOX Services LLC between 2008 and 2015 which MOX, in turn, submitted to the United States for reimbursement. In consideration of Wise’s financial condition at the time of settlement, which was supported by a certified financial disclosure, the United States is permitting Wise to pay $50,000 up front and the remainder in quarterly installments over the next five years. Earlier this year, MOX paid a $10 million settlement to the government for its role in the plot. Wise denies all claims and allegations by the United States.

EPA proposes raising fees paid by manufacturers that it regulates. Manufacturers would have to pay more money to the Environmental Protection Agency for its statutory task of reviewing the risks of commercial chemicals, according to an EPA proposal announced November 16. The proposal aims to ensure that the fees received by the EPA from industry add up to 25 percent of the agency’s costs, as authorized by the 2016 rewrite of the Toxic Substances Control Act (TSCA). “For the last six years, we’ve lacked the needed resources to build a sustainable chemical safety program that’s grounded in science, protects communities from dangerous chemicals, and supports innovation,” Michal Freedhoff, head of the EPA’s Office of Chemical Safety and Pollution Prevention, said in a statement. An industry group, the American Chemistry Council, responded, “We are extremely concerned with EPA’s proposal to considerably increase TSCA fees and at the Agency’s continued failure to adequately substantiate these costs. We want EPA to show us the math and substantiate TSCA fees and revenue.” Federal agency operating costs are sometimes offset by such fees – FDA user fees, for instance, are a supplement to that agency’s annual Congressional funding.

Leader of US Space Force says China is to be reckoned with in space technology. Focusing on China’s fast-developing ability to develop space manufacturing technology, the head of the US military’s space wing said November 27 that rapid advances in China’s military capabilities pose increasing risks to American supremacy in outer space. Lieutenant General Nina Armagno, director of staff of the US Space Force, told attendees at an Australian Strategic Policy Institute event in Sydney that China has made significant progress in developing military space technology, including in areas such as satellite communications and reusable spacecraft. This kind of manufacturing success allows countries to rapidly scale up their space programs. “I think it's entirely possible they could catch up and surpass us, absolutely,” Armagno said. “The progress they've made has been stunning, stunningly fast.”